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What Is HCM?: An Introduction And Comprehensive Guide To SAP HCM

SAP HCM (Human Capital Management) is a comprehensive software system that is designed to help businesses streamline and automate their HR operations.

 

The business landscape is rapidly evolving as every day passes and for organizations to maximize their potential, they need to effectively manage their human resources, and that is where the SAP HCM system comes into the picture.

 


With the SAP HCM system, organizations can have access to all the tools they need to optimize their HR processes and boost their productivity. 

 

By leveraging the amazing functionalities of the SAP HCM system, businesses gain the ability to effectively manage their workforce, manage their applicants, manage and train talents, pay their employees, enhance employee employment, and also align HR strategies with their goals.


However, one common misconception that people usually have is the relationship between SAP HCM and SAP HR.

 

SAP HCM and SAP HR refer to the same software system.

 

When the software was launched initially, it was called SAP HR, but as the solution evolved and the scope of the software expanded, it became known as SAP HCM.

 


The change of the software’s name to HCM was mainly to signify the broader range that its functionalities now cover and to strategically indicate the software’s current importance in effectively managing human capital.

 

So, in this article, we will be looking at the role that SAP HCM plays in HR Management and the benefits you will enjoy when you implement it in your organization.

 

But first, let’s take an in-depth look at what SAP HCM is and how it has evolved over the years.

What is SAP HCM?

 

SAP HCM (Human Capital Management) is a  system produced by the renowned SAP company to manage human resources.

 

It enables organizations to optimize and streamline their human resource management processes and create a more efficient employee management system.  

 

In addition, this system provides businesses with a comprehensive set of tools and functionalities that cover different aspects of HR management. 

 

It is also made up of several sub-modules and key features, which we will be talking about in the next chapter.

 

The SAP HCM module empowers them to centralize their HR processes, enhance data accuracy, eliminate redundant tasks,  and make more well-informed decisions based on the real-time insights that it provides.

 

According to Wikipedia, the SAP HR was created between 1979 and the 1980s which was the SAP R/2 period. 

 

The creation of SAP HR made it the first enterprise resource planning (ERP) system that integrated human resources functions. 

 

However, the transition of SAP HR to SAP HCM came during SAP’s R3 era which started in 1992 when cloud-hosted HR services were being offered to small and remote businesses to make this technology easily accessible to them.

 

Today, SAP HCM has been widely adopted by organizations worldwide as a solution that enables them to streamline their HR processes, optimize how they allocate their resources, improve employee engagement,  and align their HR strategies with their goals as an organization.

 

In the upcoming chapters of this article, we will be discussing how SAP is transitioning from SAP HCM to more advanced cloud-based talent management solutions and what the future holds for the system. 

 

But for now, let’s look at the major modules of SAP HCM.

SAP HCM Modules

 


Here are the major modules of the SAP HCM system: 

A. Organizational Management

The management of an organization’s structure and hierarchy is enabled by the organizational management module in SAP HCM. 

 

This module provides tools and functionalities that enable organizations to create, maintain, and analyze how it will be structured. 

 

This involves the various departments, positions, reporting lines, and also job descriptions.

 

HR professionals can use this module to effectively manage and visualize the organization’s desired structure. 

 

With this module, they can also facilitate efficient resource allocation, identify skill gaps, and support decision-making processes that will help design and reconstruct the organization.

B. Personnel Administration

The Personnel Administration module is a fundamental module in SAP HCM that handles core HR processes related to employee master data.

 

 This module supports companies in carrying out HR tasks such as hiring, onboarding of employees, management of employee contracts, and maintenance of employee data. 

 

It also enables the proper storage and management of accurate and updated employee records and data which helps organizations to maintain employment history,  manage employee records, and generate important reports.

 

And to ensure that all employee master data are up-to-date and traceable, the module gives each data a validity date which creates a timeline that makes sure that the changes are transparent.

 

And all thanks to its sub-module called Personnel Cost Planning and Simulation, it enables seamless and systematic personnel management for organizations.

C. Time Management

The Time Management module in SAP HCM enables organizations to efficiently track and manage employee working hours, attendance, leaves, and absences. 

 

This module provides organizations with the tools to properly record employee time data, manage their shift schedules, and configure time-related rules and policies.

 

And by automating time-related processes, this module makes it possible for organizations to monitor employee attendance, enforce leave policies, and also ensure compliance with labor regulations.

 

The attendance and absence data gained from this module helps organizations to accurately calculate and process the payment of employees, and this is why this module is usually integrated with the Payroll Accounting module. 

D. Payroll Accounting

SAP HCM’s Payroll Accounting module is responsible for the accurate calculation of employee payments and the processing of payroll-related tasks. 

 

And to ensure that it correctly calculates the net pay for employees, this module includes different elements such as salary components, benefits, taxes, deductions, and social security contributions, if any. 

 

This module is usually integrated with other modules such as Time Management Personnel Administration in order to retrieve the relevant data it needs to accurately process the payroll. 

 

In addition, this module ensures timely payment of salaries by facilitating smooth communication with financial systems and generating pay slips. 

 

It also makes sure that businesses comply with the legal and statutory requirements. 

E. Travel Management

This module is the part of SAP HCM that facilitates the automation and streamlining of the processes involved in the management of employee travel, the expenses involved, and reimbursements.

 

That’s not all, this module also covers travel requests, travel planning, travel policy enforcement, expense claims, and travel expense settlement.

 

In addition, the Travel Management module enables organizations to establish standard travel policies, efficiently capture and process travel expenses, and generate accurate reports of the expense for each trip.

 

This improves an organization’s compliance with their travel policies, gives them better control and visibility over travel-related costs, and also simplifies the reimbursement process for their employees.

F. Recruitment

As its name implies, this module is in charge of helping businesses manage vacancies and the employment process. This module is in charge of the entire process of attracting, selecting, and onboarding new employees.

 

This module provides companies with the tools to manage job postings, track applicants, screen resumes, schedule interviews, and evaluate candidates. It also enables them to move job descriptions and requirements from the SAP HCM system to various online platforms for more thanks. 

 

And all thanks to this module’s ability to centralize recruitment processes and automate repetitive tasks, companies can now reduce time-to-hire, boost their talent acquisition strategies, and improve the overall recruitment experience for both themselves and their candidates.

 

Also, in the way this module streamlines the recruitment workflow, it makes it easier for HR teams to collaborate effectively, figure out the most-qualified candidates, and make more informed decisions on who to hire and who not to. 

G. Training and Event Management

If your organization trains employees on how to develop on the job or holds recurring events then this module will excite you.

 

The Training and Event Management module helps organizations in planning, evaluating, and carrying out training activities to educate their employees on how they can be better at the work they do. 

 

Not only does this module enable the SAP HCM system to store lectures and papers from an entire event catalog but it also creates schedules for recurring events, while using existing events as templates. 

H. Employee Self-Service (ESS)

The Employee Self-Service module in SAP HCM enables employees to individually manage their personal information, submit their leave requests, and update their skills and qualifications on the system by themselves.

 

This module allows employees to independently perform routine HR tasks and hence reduces some administrative loads from the table of the HR department. 

 

And by doing this, it enhances the accuracy of data, promotes employee engagement, and improves the overall delivery of HR services. 

I. Manager Self-Service (MSS)

The MSS module in HCM gives managers access to the HR-related information and tools that they need to properly carry out their managerial tasks. 

 

Through this module, managers can view and approve leave requests, manage team schedules, monitor employee performances,  and conduct performance appraisals. 

 

This module also helps managers to communicate and collaborate better with their teams. 

 

Haven discussed the major modules of SAP HCM, let’s now discuss the role that SAP HCM plays in HR management.

The Role of SAP HCM in HR Management

SAP HCM provides organizations with a comprehensive set of tools and functionalities to help them streamline and optimize their HR processes, therefore simplifying these processes.

 

One of the ways it simplifies these processes is by eliminating redundant activities and automating various tasks, hence reducing manual efforts.

 

The features and functionalities of the SAP HCM system also ensure that workflows are organized, and regular processes such as onboarding, performance management, and benefits administration, are automated.

 

For example, the SAP HCM self-service submodules enable employees to update their personal information, request leaves, and access other HR-related information by themselves and this reduces the administrative burdens on the HR personnel. 

 

And by reducing these administrative activities, SAP HCM enables HR teams to focus on more strategic initiatives and activities that add more value to the organization.

 

Not only does the SAP HCM system simplify HR operations but it also enhances data accuracy and enables HR professionals to make more informed decisions.

 

Data accuracy is very important in HR management, and SAP HCM ensures that employee data is always accurate throughout the entire employee lifecycle.

 

It combines the entire employee information into a single, centralized database, hence minimizing data duplication and inconsistencies and ensuring accurate and reliable information is properly maintained. 

 

The accuracy of employee data makes it easy for an organization to carry out efficient payroll processing, and minimize salary errors and miscalculations.

 

The reliable data provided by the SAP HCM system also enables HR teams to make more informed and data-driven decisions, generate accurate reports, and comply with regulatory requirements.

 

That’s not all, SAP HCM also helps organizations to properly manage their workforce by providing them with better visibility and control over their workforce.

 

SAP HCM modules like Organizational Management and Personnel Administration enable organizations to efficiently manage their organizational structure, track employee assignments, and keep an eye out for any changes in their employee data.

 

Meanwhile, SAP HCM’s Time Management module enables organizations to keep track of employee attendance, leaves, and working hours, and ensures accurate payroll processing, while also facilitating efficient workforce scheduling.

 

With these exceptional functionalities provided by SAP HCM, organizations can easily identify skill gaps, and promptly address challenges relating to workforce planning.

Benefits of Implementing SAP HCM

The advantages that organizations can gain by implementing SAP HCM include: 

• Streamlined and Simplified HR Operations 

One of the major benefits organizations can gain from implementing SAP HCM is streamlined and simplified HR operations. 

 

SAP HCM automates HR processes, reduces manual effort, and simplifies administrative tasks.

 

It also helps organizations to streamline tasks such as employee data management, performance management, attendance tracking, leave requests, and payroll processing. 

 

And by streamlining and simplifying these processes, it improves efficiency and productivity, eliminates redundancy,  minimizes errors, enhances the accuracy of data, and reduces administrative costs. 

• Improved Workforce Management

Another advantage that organizations can enjoy when they implement SAP HCM is the effective management of their workforce. 

 

SAP HCM provides comprehensive tools and modules such as Organizational Management, and Time and Attendance Management, to enable organizations to track how their employees are performing, and promptly identify and address skill gaps.

 

Its Talent Management module also helps companies plan for future talent needs. 

 

By leveraging these modules and functionalities, organizations can also be able to make more informed decisions concerning their workforce and enhance the overall performance of their business. 

• Accurate Payroll Processing

With SAP HCM, organizations can be able to accurately calculate the salaries or payment of each employee and pay it on time. 

 

SAP HCM has modules that can enable companies to retrieve employee performance and attendance data for a particular period and accurately calculate their pay.

 

By doing this, manual errors are eliminated, tax and labor regulations are complied with, employee satisfaction is enhanced, and therefore trust is built between the workforce and the organization. 

• Enhanced Employee Engagement and Self-Service

One of the standout abilities of SAP HCM is its Self-service features that allow employees to take control of their HR-related tasks.

 

With SAP HCM, employees can access the self-service portals by themselves and independently update their personal information, request leaves, and do a lot more. 

 

Through this functionality, employee engagement is improved, the accuracy of employee data is assured, and there is a reduction of administrative burdens on the HR team.

• Data-Driven and Strategic Decision-Making

SAP HCM has robust analytics capabilities that organizations can use to gain valuable insights into their HR data. 

 

With the HR analytics functionality in SAP HCM, organizations can track workforce trends, monitor key HR metrics, and identify areas they need to improve on. 

 

Data gained from HR analytics can also help organizations to make more informed and data-driven decisions and align HR strategies with their business goals.

• Compliance With Global And Local HR Regulations

SAP HCM carries out automated compliance checks, robust reporting, and provides continuous legal updates and support. 

 

So, when an organization implements it, these functionalities enable them to comply with local and global HR regulations and avoid compliance risks.

 

It also generates accurate compliance reports and helps these organizations to adapt to constantly-evolving regulations. 

 

In addition, it ensures that the HR processes of these organizations align with the required legal frameworks.

 

Let’s now look at some companies that have implemented SAP HCM in their operations and seen commendable results.

Case Study: SAP HCM in Action

According to Infoclutch, over 16,000 companies successfully use SAP HCM. 

 

Meanwhile, Enlyft reports that over 12,000 companies currently use SAP HCM.  

 

And according to the report on Enlyft, companies in the Information Technology and Services and Computer Software industries make up the highest users of the system with 20% and 6% users respectively. 

 

Just like the SAP MM module, the companies that use this system are of different sizes and from different locations and this shows that organizations of different sizes can use it effectively.

 

Some of the reputable and renowned companies that use this system include The Walt Disney Company, Exxon Mobil, Costco Wholesale Corporation, and New York Power Authority, amongst others.

The Future of SAP HCM


After the SAP company evolved from the HR to the HCM system, its desire to be the leading name in the cloud-based product market grew even more, and this led to the company acquiring companies that sell cloud-based products and solutions.

 

This was further boosted by Garner‘s report that “By 2025, 60% of global midmarket and large enterprises will have invested in a cloud-deployed HCM suite for administrative HR and talent management.”

 

One of the companies they acquired in 2011 was the SuccessFactors company. 

 

An American company that is regarded as one of the leading providers of cloud-based talent management solutions. 

 

So, after acquiring this company, the SAP company then integrated its own services into this cloud-based technology and this has made SAP become a leader in the cloud-based HR solutions market.

 

This new suite provides more modules, features, and tools and hence it is cloud-based, it provides businesses with updates every quarter that includes new improvements to its existing features without requiring extra maintenance. 

 

That’s not all, to ensure businesses stay up-to-date with the legal laws, all legal changes are also automatically adapted into the suite. 

 

With the remarkable technological orientation of SuccessFactors, the SAP HCM system will be able to remain relevant despite the new HR technologies and trends that are constantly emerging.

 

And by leveraging this cloud-based solution, SAP HCM will be able to provide organizations with the ability to access HR functionalities and data from anywhere, anytime, using any device. 

 

It will also be able to provide enhanced security, easier integration with other systems, and a more agile and scalable HR solution.

 

And with several reports stating that HCM would be totally replaced by the cloud-based SuccessFactors suite in the long run, it is safe to say that the future of SAP HCM and human capital management in general, is bright.

Conclusion 

SAP HCM is a system that offers a comprehensive solution to the HR management needs of companies.

 

Not only does it empower organizations to streamline their HR processes, it also enhances proper workforce management, and fosters overall organizational success. 

 

So, you should consider adopting the use of SAP HCM for your organization’s HR management needs, and operations.

 

With its robust functionalities, it can help your organization to streamline its HR operations, improve the accuracy of its data, drive strategic initiatives that will align with its business goals, and enable it to enjoy all the numerous advantages that are stated in this article. 

 

This system is the future of HR management and has a very promising future so not only will it help your organization today but it will play a very important role in unlocking the full potential of your workforce, transforming your HR processes, and achieving greater efficiency and success, in the long run.

 

But before implementing it, you and your employees need to, first of all, gain adequate knowledge on how to properly use its various functionalities and get massive results. 

 

So, take the first step today and register for our training course that will teach you all you need to know about properly using and managing the SAP HCM system. 

 

To apply, click HERE.

FAQs 

• What Is The Difference Between SAP HR And SAP HCM?

SAP HR and SAP HCM refer to the same software.

 

SAP HR (Human Resources) was the name used to describe the software in the past. 

 

But as time went on, SAP rebranded the module as SAP HCM (Human Capital Management) to strategically indicate its nature of managing human capital. 

 

So, SAP HCM is the updated version of SAP HR, but they both refer to the same software.

• What Is SAP HCM Used For?

SAP HCM is used to manage different HR processes within an organization. 

 

It provides comprehensive tools that enable organizations to optimize and streamline HR operations, enhance workforce management, and align HR strategies with the objectives of their business. 

 

In addition, it enables streamlined and simplified management of employee data, personnel administration, time and attendance, payroll processing, HR analytics, self-service capabilities for employees and managers, and lots more.

• What Are The Key Modules In SAP HCM?

The key modules in SAP HCM include: 

 

  • Personnel Administration

 

  • Time And Attendance Management

 

  • Payroll Processing

 

  • Organizational Management 

 

  • Recruitment 

 

  • Training And Event Management

 

  • Travel Management

 

  • HR Analytics

 

  • Employee Self-service (ESS), and 

 

  • Manager Self-service (MSS).

• What Are The Key Features Of SAP HCM?

The key features of SAP HCM include: 

 

  • PINCH 

 

  • ABKRS

 

  • TMSTA

 

  • SCHKZ

 

  • QUOMO

 

  • NUMKR

 

  • DATAR

 

  • IGMOD

 

  • PLOGI

 

  • CONTR

 

…….amongst others.

 

To learn more about SAP HCM features, click HERE

• What Are The Benefits Of Using SAP HCM In My Business?

 

The benefits of using SAP HCM in your business include: 

 

  • Simplified and Streamlined HR Processes

 

  • Enhanced Workforce Management

 

  • Improved Data Accuracy

 

  • Accurate Payroll Processing

 

  • Strategic And Informed Decision-making Through Analytics

 

  • Alignment of HR Strategies With Organizational Objectives

 

  • Improved Employee Engagement and

 

  • Overall Organizational Success.

• How Does SAP HCM Enhance HR Management?

SAP HCM enhances HR Management by providing comprehensive tools and functionalities that:

 

  • Automate Administrative HR Tasks

 

  • Optimize Workforce Management

 

  • Improve Data Accuracy

 

  • Facilitate Accurate Payroll Processing

 

  • Enable Strategic and Informed Decision-making

 

  • Provide HR Analytics For Insights And Trends

 

  • Make Self-service Portals Available For Employees And Managers. 

 

  • Enable HR Professionals To Focus On Strategic Initiatives.

• How Can I Implement SAP HCM In My Business?

You can implement SAP HCM in your business by, first of all, figuring out what your business needs are. 

 

After doing this, you can then select the appropriate modules that can solve these needs, and then configure the system to align with your desired HR processes. 

 

Then, you can choose to integrate the system with other systems and then migrate data to these integrated systems.

 

Next, you need to provide you and your HR personnel with the training they need to properly use and maintain this system. 

 

And by applying for our SAP HCM training program, we can equip you with all the knowledge they need to effectively use and maintain the system. 

 

Note: Before implementing this module, it is recommended that you reach out to SAP consultants or implementation partners that have experience in SAP HCM to help you properly implement it and also set it to match your business needs.

• How Does SAP HCM Compare To Other HR Management Tools?

SAP HCM possesses the flexibility and scalability qualities that other HR management tools do not have. 

 

And unlike other HR management tools, this module allows integration with other modules to enable end-to-end business processes. 

 

In addition, SAP HCM has great self-service functionalities, robust analytics capabilities,  and compliance features that make it an all-in-one solution to diverse HR management needs.

 

And this stands it out from other HR Management tools. 

27th September 2023
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